100 Percent Revenue Neutrality Laser Talk

One hundred percent ensures that two-thirds of American households will come out equal or ahead regarding the increase in energy costs. This calculation takes into account not just direct energy costs, but the pass-through businesses will add to the cost of their products [1].

Since about 70 percent of our economy is consumer spending [2], putting additional cash in the hands of these consumers has the potential of being stimulative.

Members of Congress who signed Grover Norquist tax pledges can honor their pledge and still vote the right way [3]. Venture capitalists, banks, and entrepreneurs seeing a predictable price signal will create breakthroughs in innovation that in some cases are unimaginable at this point.

A carbon fee is the most efficient and direct way to send a meaningful price signal to the markets [4].

Initially, a low price on fossil fuels will not be felt by consumers. As the price goes up, it will increase costs steadily for all households. It will be very difficult to maintain public support if people are not getting the money they need to offset their increase in costs.

Skeptic Claims and One-Liners

Carbon Fee Skeptic Claim: Some of the revenue raised should be used to foster renewables.
One-Liner: With a steadily and robustly rising price on carbon, it won’t be long before renewables are cheaper outright, and we won’t need subsidies at all.

Carbon Fee Skeptic Claim: 25% of the revenue must go to the government because taxation creates a drag on the economy causing a fall in government revenues, thus increasing the deficit
One-Liner: If the dividend is taxable, this is not a problem.

Carbon Fee Skeptic Claim: Some of the revenue should be used for something else.
One-Liner: Republicans will only come to the table if this is 100% revenue neutral.

Carbon Fee Skeptic Claim: People will use the dividend to buy more fossil fuels.
One-Liner: The decision point is the key moment; if apples from Chile and apples from down the road are right next to each other, the Chilean apples will be more expensive, and consumers will chose the cheaper apples.

Carbon Fee Skeptic Claim: Republicans will never sign on to a tax.
One-Liner: Even Republicans who signed Grover Norquist’s pledge can vote for this and not violate their pledge as long as it’s revenue neutral* (Note, this was Grover Norquist’s original position, but he changed it later after pressure from his funders, the Koch brothers).

  1. Boyce, James K; Riddle, Matthew E. “Clear Economics: State-Level Impacts of the Carbon Limits and Energy for America’s Renewal Act on Family Incomes and Jobs.” 2010. Political Economy Research Institute.
  2. Michelle Jamrisko. “Consumer Spending in U.S. Climbs Even as Taxes Hurt Incomes”. Mar 1, 2013. Bloomberg.
  3. Davenport, Coral. “Norquist: Carbon-Tax Swap for Income-Tax Cut Wouldn’t Violate No-Tax-Hike Pledge”. Published online: Nov. 12, 2012. National Journal.
  4. “Policy Options for Reducing CO2 Emissions.” February 2008. The Congressional Budget Office.

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